International Business - CHAPTER 2

Firms that are more successful at global competition display each of the following qualities except ________. A) identifying foreign market opportunities aggressively B) approaching internationalization from a reactive standpoint C) actively pursuing partnerships with foreign firms D) focusing intensively on building organizational capacities

B

Global firms shift their manufacturing and procurement to foreign locations in order to ________. A) avoid the pressures of global competition B) benefit from low labor costs C) reduce the impact of regional recessions D) avoid oversight by international agencies

B

Globalization Debate (Scenario) In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps homogenize national cultures. Rina Taylor is assigned to counter Juan's position. Which of the following most likely supports Rina's argument over Juan's concerning wages and working conditions in developing countries? A) Most African countries today still suffer from low or negative GDP growth. B) Vietnam has experienced a five-fold increase in wages as a result of the growth of the footwear industry there. C) The move of Electrolux to Mexico cost Michigan 2,700 jobs. D) Minimum wages should be established at set levels, regardless of the impact on the number of jobs.

B

Internationalization Conference (Scenario) At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country. 47) The representative from Business A is most likely from which of the following countries? A) China B) United Kingdom C) Mexico D) Brazil

B

Internationalization Conference (Scenario) At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country. The representative from Business C is most likely from which of the following countries? A) Italy B) Brazil C) United States D) France

B

Multinational firms first emerged in which phase of globalization? A) first B) second C) third D) fourth

B

Reduction in trade barriers is associated with the emergence of which of the following? A) Japan's transition to a command economy B) regional economic integration blocs C) member defection from the WTO D) violation of GATT provisions

B

Technological advances have had their greatest impact in all of the following areas except ________. A) manufacturing B) financial services C) transportation D) communications

B

The first phase of globalization was characterized by which of the following? A) the rise of steel production B) the growth of railroads C) the spread of electricity D) the rise of SMEs

B

Which of the following drivers of market globalization enables firms to engage in foreign currency transactions? A) economic development B) integration of world financial markets C) market liberalization D) reduction of barriers to investment

B

Acme Software (Scenario) Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research which shows that German health care companies have a strong demand for the type of software that Acme offers. Which of the following questions would be most important to for Acme to evaluate when making the decision regarding whether to hire one of the Indian companies for software development? A) What benefits have Indian companies gained historically from internationalizing their value-chain activities? B) Do the Indian businesses have an established history of developing software products for multiple industries? C) Would the lower cost of outsourcing allow Acme to sustain a competitive advantage in its business operations? D) Is either of the Indian businesses interested in moving its operations to a foreign country?

C

Each of the following represents a firm-level consequence of market globalization except ________. A) firms must proactively internationalize to reduce potential threats B) firms must deal with new business risks C) an international focus is viable only in certain industries D) firms must manage intense rivalry from foreign competitors

C

Global Operations Report (Scenario) As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia. 50) Which of the following drivers of market globalization does Markus most likely cite as responsible for the company's expansion to Eastern Europe? A) advances in technology B) integration of world financial markets C) market liberalization D) industrialization

C

Global Operations Report (Scenario) As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia. In describing the main driver behind Pax's expansion to China, Rashid most likely emphasizes ________. A) economic development B) advances in technology C) reduction of barriers to trade D) integration of world financial markets

C

Globalization Debate (Scenario) In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps homogenize national cultures. Rina Taylor is assigned to counter Juan's position. Rina most likely counters Juan's claim regarding environmental effects by pointing out which of the following? A) Land preservation is more important than pollution reduction for preserving the environment. B) China's landscape was permanently altered by the construction of the Three Gorges Dam. C) Environmental destruction tends to diminish in the long run, as economies develop. D) Attempts at foreign cultural imperialism are often blocked by national governments.

C

Over time, the GATT evolved into which of the following? A) World Bank B) International Monetary Fund C) World Trade Organization D) NAFTA

C

Technological leapfrogging is defined as which of the following? A) combining analog and digital technologies in the same product B) adopting new technology as soon as it is released C) bypassing certain stages of technology when upgrading to new products D) waiting to sell new technology until it has proven market success

C

The free movement of capital around the world is known by which of the following terms? A) bond-based debt financing B) regional economic integration C) the globalization of capital D) common market arrangements

C

Which of the following countries has the lowest gross national income (GNI) per person? A) Norway B) Germany C) India D) Canada

C

Which of the following has the fastest growth rate of cellular phone subscribers in the world? A) Europe B) North America C) Africa D) Asia

C

Which of the following is not a driver of market globalization? A) market liberalization B) technological advances C) increased import tariffs D) economic development

C

Which of the following reflects the major contribution of GATT to globalization? A) strict controls on international currencies B) worldwide economic downturn C) reduction of barriers to international trade D) advent of new communications technology

C

________ is a financial network through which individuals can transfer money to individual recipients in other countries. A) International Monetary Fund B) GNI C) SWIFT D) Vodafone

C

Acme Software (Scenario) Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research which shows that German health care companies have a strong demand for the type of software that Acme offers. 57) Which of the following activities in Acme's value chain would be internationalized if Acme decides to establish a development contract with one of the Indian software firms? A) sales B) distribution C) marketing D) procurement

D

In the third phase of globalization, multinational firms originated from all of the following except ________. A) United States B) Japan C) Western Europe D) Brazil

D

Internationalization Conference (Scenario) At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country. The representative from Business B is most likely from which of the following countries? A) Panama B) Hungary C) Singapore D) Japan

D

The end of the Cold War was signaled by each of the following except ________. A) the collapse of the Soviet Union's economy B) the tearing down of the Berlin Wall C) free market reforms in China D) China's move to join the WTO

D

The most direct firm-level consequence of market globalization affects which of the following? A) the firm's global sourcing contracts B) the offshoring potential of particular activities C) research and development costs faced by the firm D) the firm's entire value chain

D

The most recent phase of globalization is characterized by which of the following? A) rise of multinational companies from Japan B) reduction of barriers to trade by Western industrialized countries C) trade of commodities by trading companies D) enormous growth of cross-border trade and investment

D

Value-chain activities are defined as which of the following? A) the methods through which governments promote economic integration B) the aggregate activities of internationally active firms C) the process of designing a product for a global market D) the sequence of value-adding activities performed by a firm

D

Which of the following countries are considered to be the beachheads of technological advances? A) Japan and China B) Hungary and Poland C) Brazil and Mexico D) China and India

D

Which of the following represents the final stage in a firm's value chain? A) marketing B) procurement (sourcing) C) research & development D) distribution & after-sales service

D

Which of the following terms refers to the relocation of manufacturing and other value-chain activities to cost-effective locations abroad? A) protectionism B) cultural imperialism C) labor migration D) offshoring

D

A firm's decision to internationalize is generally made as a reaction to the phenomenon of market globalization.

FALSE

China's consumer market is generally resistant to purchasing technologically advanced products.

FALSE

Converging lifestyles and preferences worldwide help to promote traditional values in individual countries.

FALSE

Industrialization implies that emerging market countries are increasing their dependence on low-cost labor.

FALSE

The Great Depression marked the beginning of the second phase of globalization.

FALSE

The end of the Cold War in 1989 hindered the forces of market liberalization in Eastern Europe.

FALSE

The rate of speed at which nations integrate into the global economy is relatively consistent, regardless of income level.

FALSE

Firms that pursue internationalization as a strategic move tend to approach global competition more aggressively than do firms that internationalize for reactive reasons.

TRUE

Globalization has led buyers to become more demanding and to shop for the best value worldwide.

TRUE

In advanced regional economic integration blocs such as the "common market," barriers are removed to the cross-border flow of factors of production.

TRUE

One contribution of the World Trade Organization is to help maintain reduced trade barriers throughout the world.

TRUE

One method used by global companies to drive down prices is product standardization.

TRUE

Technological advances have helped make internationalization affordable for all sizes of firms.

TRUE

The initial phase of globalization was triggered in part by the introduction of the railroad.

TRUE

A regional economic integration bloc is characterized by all of the following except ________. A) the reduction of investment flows among members B) the implementation of common business regulations C) jointly harmonized fiscal and monetary policies D) the reduction of trade barriers among members

A

All of the following represent examples of regional economic integration blocs except ________. A) World Trade Organization B) European Union C) Mercosur D) NAFTA

A

At the time of the Berlin Wall collapse, which of the following countries had not already embarked on a program of market-based reforms? A) India B) Indonesia C) South Korea D) Malaysia

A

Global Operations Report (Scenario) As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia. Lavonne's research most likely recognizes which of the following drivers of market globalization as responsible for the company's expansion to Japan? A) integration of world financial markets B) modernization C) adoption of free markets D) reduction of barriers to investment

A

Globalization Debate (Scenario) In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps homogenize national cultures. Rina Taylor is assigned to counter Juan's position. 53) Which of the following does Rina most likely cite as a counter example to Juan's argument regarding the influence of MNEs on national sovereignty? A) passage of the Sarbanes-Oxley Act of 2002 B) technological advances in computer-aided design of products C) the political influence of large firms such as Walmart D) the actual GDPs of Israel, Greece, and Poland

A

Globalization Debate (Scenario) In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps homogenize national cultures. Rina Taylor is assigned to counter Juan's position. Which of the following most likely supports Rina's argument over Juan's concerning the homogenization of national cultures? A) The standardizing forces of globalization are often resisted through increasing nationalism. B) Foreign values tend to shift not just superficial aspects of culture, but deeply held beliefs as well. C) Material goods such as cell phones and computers are found in most homes throughout the world. D) In most industries, domestic operation alone cannot sustain competitive business growth.

A

Highly advanced internationalizing firms seek a simultaneous presence in which of the following trading regions? A) North America, Europe, and Asia B) North America, Africa, and Central America C) Eastern Europe, Australia, and North America D) Asia, Europe, and South America

A

The ability of a nation to govern its own affairs is known as ________. A) sovereignty B) liberalization C) interdependence D) homogenization

A

The third phase of globalization was triggered by ________. A) the end of World War II B) the invention of electricity C) the end of World War I D) economic growth in emerging markets

A

Which of the following is the most transformative technology for developing economies? A) cell phone B) Internet C) extranet D) e-mail

A

Which stage comes before procurement in a firm's value chain? A) research & development B) marketing C) manufacturing D) distribution

A

Acme Software (Scenario) Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research which shows that German health care companies have a strong demand for the type of software that Acme offers. Which of the following would be most important for the consulting group to consider when deciding whether to recommend that Acme internationalize its sales efforts to Germany? A) Will Acme save money by on advertising by targeting small rather than large companies? B) How intense is the competition from German companies offering similar products? C) What type of training is received by programmers in software firms abroad? D) How successful have German companies been at marketing to U.S. customers?

B